Financial Research Softwares

Hello,

From the very beginning, trading has always been about information. ‘New oil’ or ‘new gold’ are just some of the phrases used to describe the value of data in financial markets. And rightly so. Data fuels every aspect of the trading process.

Whoever has the best and the fastest information gains the edge.

With an overwhelming 85% of banks, investors, and capital markets service providers planning to increase spending on data management, the value of data in financial markets is clearly increasing.

But where is this data coming from? To find out, this week, we deep-dive into the world of Financial research software and data vendors.

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Trivia Question for the week: Which billionaire, publisher, and former mayor is  also the founder of one of the largest financial data companies in the world?

Scroll down to the bottom for the answer!‍

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❓What is a Financial Research Software?

The main function of financial research software is to provide financial analysts and investors with easy access to key documents, estimates, market news, and financial statements. They are widely used by portfolio managers, financial analysts, and other finance and investment professionals to

• Locate, sort, and analyze relevant data to help shape the investment decision-making process.

• Manage the analytics and market evaluation critical to portfolio selection.

• Keep up to date on the markets, issue market predictions, and offer investment advice.

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To qualify for inclusion in the Financial Research category, a product must:

• Aggregate and provide real-time access to financial market news and key documents.

• Provide access to macroeconomic data, company information, transaction information, and capital structure information.

• Contain tools for analyzing financial data.

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Solutions in this category also may offer custom reporting, contain risk analytics features, perform stock screens, and include charting tools.

Globally, there are more than 3000 products/services, provided by more than 500 suppliers, that cover the Market Data demand of the Financial Operators: from real time instrument prices to reference data.

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🔎  An Overview of Popular Financial Research Softwares

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⏳  Relevance

For almost every financial firm, data is one of its most valuable assets. And managing such high-value, high-volume data with the correct intelligence is essential for a business to succeed.

Given the volatility of markets worldwide, predicting the next big trend is crucial for finance professionals to maintain out-sized returns for their investors. To maintain a competitive advantage, they need access to market-moving news, analytics, exclusive data, and breaking news on the financial market, as well as in-depth research from finance experts all at their fingertips.

These financial research software and databases provide such concise, well-researched, high-quality data.

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📜  History & Evolution

Financial data vendors have been in existence as long as financial data has been available.

• The first technology that allowed data vendors to disseminate was the ticker tape, starting in the 1870s. It consisted of a paper strip that ran through a machine called a stock ticker, which printed abbreviated company names as alphabetic symbols followed by numeric stock transaction price and volume information. The term "ticker" came from the sound made by the machine as it printed.

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• Paper ticker tape became obsolete in the 1960s, as television and computers were increasingly used to transmit financial information. The concept of the stock ticker lives on, however, in the scrolling electronic tickers seen on brokerage walls and on news and financial television channels.

• In 2019, Global spending on financial market data and news continued its decade-long growth streak with revenues jumping 5.6% to a record $32.0 billion.  

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📈  Latest Trends

• Machine learning is an increasingly important area in this domain because these softwares manages massive amounts of data in a real-time environment. Hence much of their efforts are focused on helping the company’s customers to pluck intelligence and insight from the financial information and data coursing through its network that feeds the software/database.

• When Gary Kazantsev, head of the Machine Learning Engineering team at Bloomberg, was asked what their machine learning research could mean for users, here’s what he had to say,

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“ In many cases [machine learning] is invisible. You run a search for news, and you suddenly get magically better results. You may not know to ask the question ‘why.’ Let’s say you wanted to know which Chinese companies have made investments in the U.S. last year. You could probably answer that question [yourself] but it would take a whole lot of leg work. With the solutions we have implemented, you could just type the question into the search bar and get the answer [on your Terminal screen]. This represents an enormous gain in productivity for people who do this kind of research. More broadly, the impact is automation – both on the Terminal user side, and the Enterprise business side.”

• Recognizing that customer demands are evolving, S&P Global has created an internal team of engineers to develop machine learning capabilities, such as natural language processes, that will complement its existing data products. For example, one quant hedge fund originally signed up for Capital IQ to receive access to PDF files of investor transcripts. Eighteen months later, the quant fund now uses transcripts that integrate machine learning technology to make the transcript interactive.

• Companies like AlphaSense have a  search technology which leverages AI and natural language processing to parse topics, concepts and ideas semantically and uncover the most relevant insights from previously fragmented data sets. Headquartered in New York, AlphaSense currently has more than 300 employees, 70% of which are focused on product development.

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📚Resources

For those that wish to access relevant financial market information without paying a bomb, there are plenty of useful free websites that have historical market data, back-testing tools, risk statistics and scenario analysis capabilities -

• NYU’s stock, bond and cash historical returns

NYU professor Aswath Damodaran uses this site to update the performance numbers for stocks (S&P 500 SPX, +0.28% ), bonds (10-year Treasuries) and cash (three-month T-bills) once a year.

• Portfolio Visualizer

This site enables you to perform Monte Carlo simulations on withdrawal strategies, correlation matrixes between different assets, risk factor analysis and back-test real-world portfolios using actual mutual funds and ETFs.

• Robert Shiller’s online data

Shiller’s famous CAPE spreadsheet has the monthly stock price, interest rate, earnings, and dividend data from 1871. This site has his comprehensive real estate data on home prices from 100 years ago.

• MSCI

MSCI provides the most comprehensive free source of historical market data on foreign stock markets. It has performance numbers dating to 1970 for different countries, regions, and markets, both developed and emerging.

• Abnormal Returns

Curated content each and every day on investing, personal finance, research and anything else in the world of finance.

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🎁 Trivia Corner

Which billionaire businessman, publisher, and philanthropist is also the founder of one of the world's largest financial data companies?  

• Bloomberg is the founder and owner ofBloomberg LP, the financial data and media company. He currently owns 88% of the company.

• #10 - Michael Bloomberg's ranking on the Forbes 400 List of richest Americans for 2018.

• He is a former 3 term  mayor of New York City.

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